HMRC has been stepping up its use of APNs in recent quarters as a means of legally insisting upon payments from individuals it believes to have been shielding money from taxation in the UK.

But the government’s tax-gathering body has conceded that it should not have issued APNs as it did in the case of several thousand contractors who entered a particular tax scheme based in the Isle of Man and promoted by Montpelier Tax Consultants.

According to the Financial Times, HMRC is still not convinced that money held in schemes on the island should be shielded from taxation but has accepted that it should not yet have issued APNs to those who used them.

The matter remains in dispute but the affected parties are set to receive repayments of money they handed over to HMRC last year in response to APNs which effectively left them with little choice.

However, the tax authority has been criticised for being overzealous in its pursuit of tax returns from contractors who have taken advantage of schemes such as those arranged via the Isle of Man over the course of the 2000s.

“Taxpayers should not be forced to sell or remortgage their family home in order to pay an APN when the underlying dispute remains unresolved and it may ultimately be decided that nothing is owed,” Adam Craggs from the law firm RPC has said.

Mr Craggs went on to suggest that HMRC has been slow to realise that its policy of using APNs to demand almost immediate payment of taxes can have huge consequences for the individuals affected.

The organisation “has not grasped the human cost” involved when someone is suddenly required to hand over large sums of money to HMRC, according to Mr Craggs.

HMRC has made no secret of its intention to pursue cases involving IT, banking and energy sector contractors who use schemes it views as being designed specifically to unfairly avoid or mitigate income tax obligations.

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